“Fifth major” Merlin signs 12,000 indie labels, eyes MySpace

12,000 indie labels have banded together to seek better licensing deals from …

In the last month, 12,000 of the world's independent record labels have joined forces to create a "virtual fifth major" meant to earn respect at the bargaining table in a world dominated by EMI, Warner, Universal, and Sony BMG.

80 percent of the world's music releases come not from the majors but from independent labels. Getting access to this music is a hassle for stores like iTunes and webcasters like Last.fm, since it takes an incredible amount of effort to do thousands of different (and small) deals. It's not a great situation for the indies, either, which individually don't possess the clout needed to get the best deals.

To solve the problem, the indies decided last year to launch Merlin, a "virtual" major that functions as a one-stop rights clearinghouse for indie artists. Only in the last month has Merlin officially opened its doors to applicants, though, and the labels are pouring in.

Already, Merlin has over 12,000 labels on board, including some of the biggest names in indie world. Koch, Concord, Razor and Tie, Beggars Group, Rough Trade, and Nettwerk are now on board with the new project, which gives the indies far more negotiating power than each ever had by itself. While most indie albums sell in small numbers, indie labels collectively account for 27.5 percent of total music sales worldwide; when banded together, they represent one of the largest labels on the planet.

With major label revenues faltering, CD sales tanking, and gold and platinum records harder to come by, the majors aren't quite the same force they used to be, and online distribution has made it easy for the indies to get their records onto the virtual store shelves. It's a perfect time for this sort of indie alliance and should secure the labels a major-label size payout from online stores and webcasters. More money pumped into thousands of independent labels, each doing their own unique thing, should be a boon for musical diversity. It could also give smaller labels a bit more of the capital needed to promote their up-and-coming bands.

While negotiations with existing music services are largely in place already, Merlin has announced that it is working on deals with several soon-to-be-launched services, including the highly-anticipated music service from MySpace.